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Macro EconomyMedium•7 April 2026•

1 min read

Market Volatility Recedes Amid Ceasefire Hopes and Federal Reserve Caution

Key Facts

1Interest rate volatility (VIXTLT Index) fell over 31 points to 85 bps vol.

2Fed Chair Powell signaled the central bank will take a 'wait and see' approach to energy-driven inflation increases.

3The VIX Index declined by 7 points last week, contributed by a decline in SPX call skew and convexity.

Market volatility across interest rates and equities has seen a significant decline as geopolitical tensions show signs of easing. The VIX Index dropped by 7 points last week, while interest rate volatility, measured by the VIXTLT Index, plunged over 31 points to 85 basis points. This shift comes as investors price in potential de-escalation in the Middle East and a more patient stance from the Federal Reserve. Fed Chair Jerome Powell indicated that the central bank will adopt a "wait and see" approach regarding inflation driven specifically by energy prices. The reduction in the "fear premium" is providing support for risk assets such as the S&P 500 and Bitcoin. Analysts note that the decline in SPX call skew and convexity further contributed to the stabilizing market environment.

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